Need Retrospective Appraisal Guidance

[Carnivore]

Joe,

There are no USPAP restrictions on using post effective salas data or other data in a review or in an retrospective appraisal. There is one restriction on post effective date sales compariosn or other data, that is in regards to a review. The review appraiser is not allowed to impune the the appraisal under review. Other than that an appraiser can and should use all information/data that is available.

In regards to probate or other types of work similar to this it is very wise to use post DOD(date of death) to confirm your analysis of the market trends and other such important information. Try convincing a judge otherwise.

You do have a point about the client requirements. There is typically a very good dialogue with clients in non-lender work that typically is not found in the lending community.

 

[JM2187]

Never said there were USPAP restrictions. To repeat, in my experience, which is extensive in this area, few (if any at all) clients will accept sales data that closed after the effective date. As such I would advise discussing this with the client, if such data is to be used, prior to submitting the report.

 

[aussie ken]

From 10000miles away it seems to me that a "private valuation" would be the perfect opportunity to escape some of the regimentation that my collegues in the US have to incur in using specific forms for valuation work.

Do you good people have to use 1004 or similar for any valuation report? Are you not allowed to use your initiative to design a layout that is readable and understandable for your client?

Curious

 

[Marcia Langley]

Ken,

Yes, for non-mortgage work we can make a narrative report. Our new Fannie Mae form is restricted to mortgage lending only.

Many will use the old Fannie Mae (which can be used for non-mortgage work) form with a more in depth narrative addendum instead of a narrative only for the advantage of the utility of the grid.

 

[xm39hnu]

Many will use the old Fannie Mae (which can be used for non-mortgage work) form with a more in depth narrative addendum instead of a narrative only for the advantage of the utility of the grid.

The grid can be duplicated as an Excel template, used for adjustments, and plopped into the middle of a narrative just fine.

 

[Stephen J. Vertin MAI]

few (if any at all) clients will accept sales data that closed after the effective date.

You know Joe you are not the only person I have heard this from. I bet you the "sales data that closed after the effective date" issue was taught in a class somewhere. Most likely an AI class because most people who bring it up are AI old timers. And its just not a couple. When I first got in the business about 50 percent of the appraisers believed you should not use post sales from the date of value in retrospect.

It never made sense to me because what does it matter if you adjust up or down for market conditions. It is simply an adjustment and as we know they can move either ways. It would be interesting to find out where the concept comes from and what is it rational.

 

[aussie ken]

Thanks Marcia

 

[Bobby Bucks]

The topic of using pending sales reminds me of a field review about 5 years ago on a refinance. I pulled it up to refresh my memory. The value was $350 K. He used 3 sales in the subdivision closed within the last 12 months, but they were 6, 9 & 10 months old. They sold for 325, 278 and 285 and all were within a couple hundred square feet of GLA. The 325K was the oldest sale. Naturally all sales were adjusted upward 30K for the subject’s superior quality and he went to the high end of the range. (where else on a refi?)  In my review I did not concur with the value and I added 2 pending sales on the same street as the subject which had been built by the same builder as the subject and were far more similar to the subject in quality than the 3 closed sales. I did not adjust across the board for the subject’s “superior” quality. The 2 pending sales had been on the market for over 3 months and had been reduced in price before going under contract. The market had been declining for the past 6 months…..far too much inventory. The pending sales list prices were 270 K and 260 K. My value was $270 K. A couple days later I began getting rude faxes from the MB. He was furious because I used pending sales, he raised all kinds of hell I’m sure there is a file on me somewhere. The AMC which ordered the review handled it very well and caused me no grief at all. Reviews are thankless jobs and I’ll never do another one until the system and fees for them change drastically. Before someone says this instance is off topic, aren’t all reviews truly retrospective?

 

[Ms. Janet]

It never made sense to me because what does it matter if you adjust up or down for market conditions. It is simply an adjustment and as we know they can move either ways. It would be interesting to find out where the concept comes from and what is it rational.

Steve, I never thought of it that way, but, I totally agree. And Bobby, you really are right too. In fact, seems to me that's EXACTLY the way to do a proper review..............and I'm going to start doing just that. What better way to show the market cycle...........

Ha! I can't wait.........somebody send me a review.............:icon_biggrin:

uh, except you Joe, I guess..............

 

[Rick Kulman]

Over 90% of the appraisals performed by my office involve litigation matters with retrospective valuation dates.

You can definitely adjust up and down for market conditions to the date of value. Just make sure you know the jurisdictional rules. If in doubt only use data prior to the value date.

I have seen the courts limit sale and rental comps to those occurring on or before the value date. The rationale is that this was only the data available to the parties and that you could not predict whether a property under contract would actually close or that a tenant would actually take occupancy where the lease was out for signature.

In one case, 25 +/- years ago, in another state, before licensing, on a judges order, I watched all parties remove after date comp pages from an appraisal, tear them up and and toss them into a waste basket being held by the court clerk.

The judge then passed around a pair of scissors and made everyone cut out the portion of the adjustment grids pertaining to the after date data and then the comments in the explanation / analysis section. The cut outs went into the same waste basket.